After　a　short　introduction　to　the　concepts　of　knowware,　knowware　engineering　and　knowledge　middleware,　this　paper　proposes　to　study　the　software/knowware　co-engineering.　Different　from　the　traditional　software　engineering　process,　it　is　a　mixed　process　involving　both　software　engineering　and　knowware　engineering　issues.　The　technical　subtleties　of　such　a　mixed　process　are　discussed　and　guidelines　of　building　models　for　it　are　proposed.　It　involves　three　parallel　lines　of　developing　system　components　of　different　types-The.　key　issues　of　this　process　are　how　to　guarantee　the　correctness　and　appropriateness　of　system　composition　and　decomposition.　The　ladder　principle,　which　is　a　modification　of　the　waterfall　model,　and　the　tower　principle,　which　is　a　modification　of　the　fountain　model,　are　proposed.　We　also　studied　the　possibility　of　equipping　the　co-engineering　process,　with　a　formal　semantics.　ne　core　problem　of　establishing　such　a　theory　is　to　give　a　formal　semantics　to　an　open　knowledge　source.　We　have　found　a　suitable　tool　for　this　purpose.　That　is　the　co-algebra.　We　also　try　to　give　a　preliminary　delineation　of　a　co-algebraic　semantics　for　a　typical　example　of　open　knowledge　source　-　the　knowledge　distributed　on　the　World　Wide　Web.